When property managers are analyzing the performance of their communities and the surrounding competition, it is absolutely vital to collect accurate data. But the value of submarket data varies from metric to metric. So, how do you know what information to value the most?
Metro market reports provided by industry leaders in research offers undeniable value in terms of summarizing how a market is performing. But any manager relying on submarket information provided by such reports would be acting as a major disservice to the property they manage. Ultimately, the surefire way of understanding how your property is performing in its specific submarket is to analyze the performance of the competing properties in the immediate surrounding areas. And the only way to understand how your competition is performing is by conducting market surveys.
Metro reports are great for providing a snapshot summary of the overall economic and housing trend in any given market. This is great information for managers when making strategic, market-wide decisions, predicting where/when certain locations might become more desirable in the future, and how to position in order to capitalize on unexpected opportunities. However, the most indicative information comes from strong submarket analysis and knowing what to do or how to apply the information in a productive manner.
The reason metro market reports are not a good source of submarket data is due to how the surveys are produced and conducted. For the most part, only a handful of properties are directly contacted by the researchers. The amount of time, money, and effort it would take for researchers to contact every property in a certain state would be immense and overwhelming. So the picture of a market’s performance has to be painted with a broader brush. Consequently, the submarket data suffers and the information can become misleading.
So, if metro reports are only good for a more general snapshot of a market’s performance, how does one understand performance on a submarket level? In the end, market surveys are the most effective way of gaining specific information about a submarket and how a manager’s property compares.
However, market surveys come with their own hurdles while gathering pertinent information. Onsite employees are often already stretched too thin to obtain accurate information or they are not always trained in knowing what to look or ask for. Other property managers can refuse to provide metrics on their community’s performance or might even give false information.
One way to combat uncooperative operators is simply building a relationship on a personal level. Property managers in the same submarket working together can result in a better product for all through healthy competition, so sometimes a rising tide raises all ships.
Another effective method is using a secret shopper. Sending someone to shop apartments at a competing complex who knows what questions to ask and what information to look for can provide invaluable data that can be difficult to accurately obtain using other methods. While an operator might resist providing occupancy numbers or upcoming amenities to a competing manager, they could be much more likely to divulge that information to a prospective tenant.
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